What Banks Don’t Tell You About Business Loans
Working capital is the lifeblood of business. Businesses often need to borrow additional working capital to fund or grow their operations. If their cash flow runs low, businesses can contract or even go out of business.
When businesses and well as individuals need financial help, they often turn to their local bank. While this can often be a good idea, there are numerous other ways to obtain a needed infusion of cash.
What Banks Won't Tell You
Banks can have very strict hurdles to overcome in the quest for a loan. Their application process is generally quite intrusive, long, and drawn out. You may wait a long time before a loan decision is rendered. And, unfortunately, you may be denied.
Most banks look at your loan application through the lens of credit risk. They utilise algorithms to determine if the financial and credit information that you supply them meets their criteria for lending. These algorithms look at
Your credit history,
The projected capacity that you can the loan back,
Your potential to put up collateral,
Details of your overall financial health and asset base, and
Certain conditions that the bank may deem particularly risky in your specific situation.
For example, if your creditworthiness is determined to be too low, you'll be denied. If you've been through bankruptcy, you'll likely have difficulty getting funding.
Above all, remember that banks are operating in their own self-interest. They do not have your welfare foremost in mind.
Alternative Forms of Financing
Fortunately, there are numerous ways to obtain financing. Many of these are collectively known as alternative forms of financing. Some of these include:
Bridging loans
Accounts Receivable Financing
Franchise Loans
Asset-Based Lending
Merchant Cash Advances
Factoring, and
Unsecured lines of credit.
These are but a few. Many of these aren't part of a traditional bank's lending portfolio. They must be obtained from capital finance agents and other sources.
Finance Broker
You don't need to chase down all these possibilities yourself. Instead, let a finance broker do the legwork for you. You will save time and likely end up with a better deal than if you do it yourself.
A broker is obliged to act in the best interests of the borrower, whereas banks are not. Brokers have access to second-tier and non-bank lenders that borrowers may not be aware of, so they can help you find the most appropriate form of financing to fit your business's specific needs and circumstances. They can recommend solutions and options that you may never uncover yourself or if you work only with one bank.
Get the Best Financing Deal for Your Business
In summary, it may be in your best interest to work with a finance broker. They will uncover the best opportunities for you, save you time, and bring you the solution that you need.
Get in touch to discuss your financing requirements.
